“Floating” oil wandered around the sea for years. Now it has disappeared and the buyer is suspected: China
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Hundreds of thousands of barrels from Iran, Russia or Venezuela have accumulated on ships.
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China is believed to have bought floating oil at a bargain price after the pandemic
Since 2016, the presence of ships storing oil in the oceans has been used as a thermometer to measure the market for crude oil from countries under sanctions such as Iran, Russia or Venezuela. China seems to have destroyed them.
Oil that sailed for the West. Until now, floating oil has accumulated in excess, not meeting demand. An average of 140,000 barrels of oil remain unassigned every day.
Sanctioned oil is cheaper, but with crude levels low, there was no point in potential buyers angering the United States and its partners to save a few dollars.
Sanctions and game strategy. Well, the thermometer went dark. According to the latest report from the International Energy Agency (IEA), floating oil levels have fallen to historic lows since record levels began. Once crude oil became more expensive, someone decided it was time to gobble up the sanctioned oil, leaving the seas nearly empty.
Analysts believe China is stockpiling this oil at a favorable price to speed up its economic recovery and replenish its strategic reserves. This is not a risk-free move, but it is a bold one. Sanctioned oil, oil that Beijing buys cheaply.
Pandemic effect. The Covid-19 pandemic has increased crude oil storage volumes to dizzying levels. It was when the world began to get rid of the virus that prices began to rise, and then oil floating on the parallel market became scarce.
2023 was a record year for China’s crude oil imports, a breathtaking figure: 11.3 million barrels per day. Although Beijing denies the imports come from Iran or Venezuela, the sanctioned oil is disguised as imports from Malaysia, a country with minimal oil production.
Rising geopolitical tensions in 2024. Oil supply and demand dance a complex dance between the desire for economic growth and emissions reduction goals in the face of climate change.
Tensions in the Middle East and supply disruptions in North America have led to a new rise in prices. This year, China, India and Brazil will account for 78% of demand growth. With floating oil all but gone, they will have to pay more per barrel if they want to continue supplying themselves with oil.
Image | Wilfredo R. Rodriguez H. (CC0 1.0)
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